Home > Risk > Continuing to learn about culture from Toyota

Continuing to learn about culture from Toyota

An interesting McKinsey piece, by a retired CEO of Toyota in Canada, makes some interesting points about effective leadership. (Still) Learning from Toyota includes reflections on how Toyota implemented and obtained success from the Lean methodology. But in the process it makes points that apply whether you are using Lean or not.

Here are a few excerpts (emphasis added):

  • The reality is that many senior executives—and by extension many organizations—aren’t nearly as self-reflective or objective about evaluating themselves as they should be. A lot of executives have a propensity to talk about the good things they’re doing rather than focus on applying resources to the things that aren’t what they want them to be.
  • What happens in Toyota’s culture is that as soon as you start making a lot of progress toward a goal, the goal is changed and the carrot is moved. It’s a deep part of the culture to create new challenges constantly and not to rest when you meet old ones. Only through honest self-reflection can senior executives learn to focus on the things that need improvement, learn how to close the gaps, and get to where they need to be as leaders.
  • A self-reflective culture is also likely to contribute to what I call a “no excuse” organization, and this is valuable in times of crisis. When Toyota faced serious problems related to the unintended acceleration of some vehicles, for example, we took this as an opportunity to revisit everything we did to ensure quality in the design of vehicles—from engineering and production to the manufacture of parts and so on. Companies that can use crises to their advantage will always excel against self-satisfied organizations that already feel they’re the best at what they do.
  • Senior executives who are considering lean management (or are already well into a lean transformation and looking for ways to get more from the effort and make it stick) should start by recognizing that they will need to be comfortable giving up control.
  • ….there’s ultimately no such thing as perfection. There’s always another goal to reach for and more lessons to learn.

I was fortunate to work at a company, Solectron, that adopted Lean. I know that it can work and provide huge benefits, whether in manufacturing, finance, or internal audit.

I like several things about these messages. An effective culture is about far more than ethics and compliance. It includes:

  1. The ability for everybody to contribute to the performance of the organization without being dominated by the executive team. Leaders can and should come from every corner of the organization, but have to be freed of the chains of structure, position, and rank.
  2. A desire to continuously improve, not occasionally, but all the time. Kaizen is not something you “do”, it is a cultural philosophy.
  3. A shared commitment to excellence in performance, quality, and efficiency.
  4. Knowing when to invest scarce resources, and being willing to change what has worked in the past because it may not be best for the future.
  5. Embracing innovation, whoever’s idea it is.
  6. The ability to learn from and take advantage of setbacks, rather than always trying to pin the blame on a culprit.
  7. There’s no reason why people cannot enjoy their work.

When governance, risk, information security, internal audit and other practitioners focus exclusively on culture being about ethics and compliance, it can come at the expense of performance.

A focus on not doing wrong can inhibit the ability to do what is right. It can make an organization excessively risk averse.

When you consider culture, are you only thinking of ethics and compliance or are you looking at what it takes to be successful?

I welcome your thoughts and comments.

  1. kathryn tominey
    August 13, 2016 at 3:47 PM

    Really good article. It ought to be required reading in executive suites as well as board rooms. In a way, all systems, technology, relationships, inside and out are really, in Apple themes, “Interim” subject to perfecting, displacement,

    Even the lowliest company employee or contractor may have useful insights to offer.

    As the Sean Connery character in Rising Sun said about the Japanese model, “They fix the problem, not the blame. Their way is better”.

  2. August 17, 2016 at 6:38 AM

    I agree a good article.

    Re the points:
    “Companies that can use crises to their advantage will always excel against self-satisfied organizations that already feel they’re the best at what they do.”
    “A focus on not doing wrong can inhibit the ability to do what is right.”.

    I think the pursuit of continual improvement is an often underepresented area within many organisations who believe they havent the time or it will cost them. I do however feel that continual improvment can in itself fuel the development of risk averse behaviours if not balanced alongside other cultural aspects.

    Developments in transport and communications, technology, increased specialisation and global interdependencies have increased our interconnectedness and interdependence. One of the consequences of these developments has been a significant increase in uncertainty and disruptive change.

    The culture of many organisations has been to treat disruptive change in much the same way as incremental change and continual improvement. This has not been without consequence. The very nature of disruptive change is that it can severely challenge established practice leaving those involved feeling threatened. Feeling threatened often produces a defensive and rigid behavioural response to preserve and reinforce current practices where certainty and safety are commonplace. Those involved resort to treating such events as “avoidable” which in turn fuels a culture of blame, risk averse behaviour and internal conflict.

    The relentless pursuit of established practice can prove fatal for those businesses who have failed to recognise the world has moved on and the founding principles no longer apply. Organisations increasingly need to prepare for unexpected situations and recognise that the decision making approaches and analysis required are different for disruptive change. This needs to be reflected in the culture and values of the organisation.

    21C Organisations require the capability to:
    Manage the threat that disruptive change represents while applying creativity to the prospect of opportunity
    Recognise when the approach and behaviours used to successfully manage incremental change cannot be extrapolated to understand and manage extreme events
    Nurture rather than suppress resources that have a progressive attitude, providing an outlet for creativity and innovation, risk taking and problem solving, that transcends organisational silos to enable the organisation to adapt
    Recognise that with many of the strategic change drivers existing in the external environment, staying with a previously successful business model too long increases the prospect of not being able to adapt to the fluidity of situations

    Jim Hill

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